Patents and PTAB reform act

Full Title:
PREVAIL Act

Summary#

This bill, called the PREVAIL Act, makes many changes to how the Patent Trial and Appeal Board (PTAB), post-grant reviews, inter partes reviews (IPRs), reexaminations, and USPTO funding work. Its main aim is to strengthen patent rights for inventors, limit repetitive or strategic challenges to patents, and stop USPTO fee diversion so the office keeps its collected fees. The bill changes who must be identified in patent challenges, raises evidentiary standards in PTAB proceedings, sets new panel and conduct rules for PTAB judges, and creates a revolving fund for USPTO fees.

Key changes:

  • Real-party-in-interest rules: Anyone who gives money (directly or through an affiliate, subsidiary, or proxy) to prepare or run an IPR, post-grant review, or ex parte reexamination must be identified as a real party in interest.
  • Higher evidentiary standards at PTAB: The presumption of validity is expressly applied and petitioners must prove unpatentability of issued claims by clear and convincing evidence. Substitute claims use a lower preponderance standard for persuasion.
  • PTAB procedure changes: Panels must have at least three members; members who voted to institute cannot later hear the same review; a code of conduct for PTAB members is required; discovery is limited; claim construction must align with how courts would construe claims.
  • Limits on repetitive or parallel proceedings: The bill creates a strong single-forum rule and estoppel rules so parties who use PTAB proceedings face limits on bringing the same patent-invalidity challenges in federal court or at the International Trade Commission (ITC). It also tightens joinder and rejects petitions that repeat prior art or arguments unless exceptional circumstances exist.
  • USPTO funding: The bill ends fee diversion by creating the United States Patent and Trademark Office Innovation Promotion Fund (a revolving fund) so patent and trademark fees are collected by the USPTO and kept available without fiscal year limits for USPTO activities.
  • Other items: Expands who counts as a micro entity for institutions of higher education; requires an SBA report on small businesses and patents; directs the USPTO to make Public Search Facility materials available online free when financially viable.

What is unclear:

  • How the Director will apply standards such as “exceptional circumstances.”
  • The practical effect of the single-forum rule in complex disputes that involve both PTAB and court/ITC actions.
  • Specific implementation details for the PTAB code of conduct and how Director review power will be exercised.

What it means for you#

  • Inventors and patent owners

    • It may be easier to keep an issued patent in force at the PTAB because the bill affirms a presumption of validity and requires petitioners to meet the higher clear-and-convincing proof standard for previously issued claims.
    • PTAB panels will be at least three members, and members who voted to institute a review cannot later decide its merits.
    • Patent owners get expanded opportunities to propose substitute claims and for the Board to provide guidance on those substitutes; material submitted in support of amendments will be made public as part of the prosecution history.

  • Entities that challenge patents (petitioners)

    • Anyone funding a challenge must be disclosed as a real party in interest, including indirect funders (affiliates, proxies).
    • Petitioners bear a higher burden of proof for invalidating issued claims (clear and convincing).
    • If an IPR or post-grant review is instituted, petitioners and their real parties generally may not pursue the same invalidity challenge in federal court or at the ITC (single-forum rule).
    • Repetitive or substantially similar petitions and requests are more likely to be rejected unless exceptional circumstances are shown.

  • Law firms, funders, and third-party financiers

    • Must expect to be identified if they contribute financially to a challenge. That could affect funding arrangements and confidentiality practices.

  • PTAB judges and USPTO staff

    • A code of conduct will be required for PTAB members. Supervising officers must avoid communications that would direct or influence merits decisions.
    • The Director gains clearer authority to issue written opinions when granting rehearing or review.

  • Small businesses and universities

    • The bill asks the SBA to report on how patents and patent litigation affect small businesses.
    • The micro-entity definition is expanded to include certain university-related inventors and nonprofit organizations that hold title to patents for universities.

  • General public / users of USPTO search resources

    • The USPTO is directed to make materials available online free when financially viable, including search tools, databases, and training materials from the Public Search Facility.

Expenses#

No publicly available information.

Notable fiscal or cost-related changes in the bill:

  • The bill ends USPTO fee diversion and creates the United States Patent and Trademark Office Innovation Promotion Fund, a revolving fund into which patent and trademark fees will be deposited and made available to the USPTO without fiscal year limit.
  • On the effective date, available unobligated balances in certain existing USPTO funds are to be deposited into the new Fund, and the Patent and Trademark Fee Reserve Fund will be terminated after obligations are paid.
  • The bill does not include a separate fiscal note or specific dollar estimates in the provided material. How this change affects the federal budget, appropriations, or allocation of funds across agencies is not specified in the text provided.

Proponents' View#

The bill appears intended to:

  • Strengthen patent protections by making PTAB proceedings more like court proceedings in key ways (presumption of validity, higher burden of proof, claim construction tied to court practice).
  • Reduce abusive or repetitive challenges that, according to the bill’s findings, can be used to depress company stock prices or extort settlements.
  • Increase transparency about who funds patent challenges by requiring disclosure of financial contributors and affiliates.
  • Improve public trust in PTAB decisions by requiring multi-member panels, a code of conduct, and public written Director opinions when rehearings occur.
  • Preserve USPTO fee revenue for the USPTO itself by ending fee diversion and creating a revolving fund meant to support USPTO operations.
  • Support small inventors and university-related inventors by clarifying micro-entity status and asking the SBA to study impacts on small businesses.

Opponents' View#

One concern is that the bill centralizes more power with the Director and the PTO by adding new Director review roles and by requiring Director decisions and written opinions, which may shift decision-making away from independent administrative judges.

One concern is that raising the standard to clear and convincing for invalidity at PTAB and strengthening presumption of validity could make it harder to challenge low-quality patents and could reduce the PTAB’s role as a faster venue for invalidity review.

One concern is that the single-forum rule and stronger estoppel could prevent parallel challenges in court or the ITC, potentially locking parties into one forum even when different forums serve different purposes (for example, when injunctive relief or import bans are sought).

One concern is that broad disclosure rules for funders (including affiliates, proxies, and subsidiaries) could chill third-party financing of patent challenges or complicate funding arrangements, and the bill does not specify how to handle sensitive commercial information.

One concern is that the bill tightens rejection of repetitive petitions and gives the Director discretion to reject petitions based on similarity to prior submissions; critics could say the bill leaves uncertain standards like “exceptional circumstances” without clear definitions.

One concern is that eliminating fee diversion and making USPTO fees available without fiscal year limits changes the traditional congressional appropriation process; the provided text does not explain how oversight, accountability, or impacts on the federal budget will be handled.